The strong winds of protectionism are hitting global steelmakers. China’s oversupply and undervalued exports are forcing several countries to build higher imp…

The strong winds of protectionism are hitting global steelmakers. China’s oversupply and undervalued exports are forcing several countries to build higher import barriers, and Korean makers are not free from the same punitive actions, such as antidumping and countervailing duties either.

POSCO, Hyundai and other domestic steelmakers, which have exported half of their products, are in a state of emergency, industry sources said.

The U.S. Commerce Department decided on Friday to slap up to 61 percent of antidumping and countervailing duties on Korean-made hot-rolled steel plates. Washington is expected to levy punitive tariffs on six other steel exporters, including Japan and Brazil, but Korean makers will likely suffer more serious blows because of their high reliance on export, the sources said.

Korea exported 1.15 million tons of hot-rolled steel sheets to the U.S. last year, worth $700 million. POSCO accounted for 75 percent of the total. The nation’s largest steelmaker plans to take legal steps against the U.S., including taking the case to World Trade Organization.

“We will also try to minimize damages through converting much of our U.S. exports to other markets and other measures,” a POSCO official said.

Earlier, the U.S. department imposed antidumping and countervailing duties on cold-rolled plates from Korea and four other countries. In May, it slapped a whopping 522 percent antidumping duty on Chinese cold-rolled sheets, which are used for automobiles and consumer electronics.

The U.S. is not the only country that is increasing controls on steel imports. The European Union and India are also setting up high barriers to protect their domestic industries. The EU Commission recently imposed 22 percent and 36 percent of antidumping duties on Chinese and Russian cold-rolled plates, respectively. Earlier, it ruled that electric grafters from Korea, China, Japan, Russia and the U.S. had been dumped in Europe.

The rising trade barriers in major countries are due to global overproduction and major governments’ policies to protect domestic industries. Since the 2008 financial crisis, cheap Chinese steel products have flooded global markets, forcing Beijing’s trade partners to strengthen their protectionism. This year, the EU introduced an intensive import surveillance system on steel products produced outside the union.

When the U.S. government took a safeguard measure against imported steel products in the past, Korea’s steel export to the U.S. plunged 30 percent in a year.

“As the global economy worsens, even advanced countries are showing protectionist trends,” said POSCO Chairman Kwon Oh-joon in an email to executives and employees in June. “We need to improve our responses to the new trend by closely monitoring import restraints in major countries and expanding dialogue channels with foreign steel industries and trade authorities.”

Domestic steelmakers are racking their brains to work out countermeasures, but are at a loss what to do when foreign partners set up barriers higher, trade experts said.

“Underneath the neo-protectionism are the supply-demand problem of global steel overcapacity and the interests of steelmakers to maintain their capacity utilization ratio,” said Chung Eun-mi, senior fellow at the Korea Institute for Industrial Economics and Trade. “Neo-protectionism in the steel industry will likely continue for the time being because it is a structural problem.”

There are more optimistic analysts, though. Because the focus of the U.S. and European import restraints are on Chinese steel products, Korean steelmakers slapped with comparatively lower punitive duties may gain advantages, they said.

If major markets continue to step up protectionist moves, however, export-dependent Korean companies will feel a considerable loss in foreign sales. So far POSCO and Hyundai Steel have exported hot- and cold-rolled steel sheets to the U.S. free of tariffs.

“Our steel exports to the U.S. account for only 13 percent of total foreign shipments but we are more concerned about the protectionism spreading to other countries,” said a Korea Iron and Steel Association official.

The steel industry remains as the core of the manufacturing industry, with large correlative industrial effects forward and backward. The crisis in the steel industry can adversely affect other related sectors such as shipbuilding, automobile, electronics and construction.

Also threatening the domestic industry is the influx of Chinese products in the face of high barriers in the U.S. and Europe. Korea’s steel imports in June soared 31 percent, mainly because of the influx of Chinese products.

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The “Sudan News Gazette”, has been designed to publish news from all the sectors and that shows its attribute of catering to the interest of various kinds of readers, which has also helped it to mark its existence among the African region’s top news website.